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25 a.
m.
EST on Thursday, after the Chinese tech giant reported misses on both the top and bottom lines for its fiscal second quarter of 2022.
Analysts had forecast that Alibaba would earn $1.
93 per share pro forma on sales of more than $32 billion for the quarter.
Instead, Alibaba reported a profit of just $1.
74 per share and sales of only $31.
15 billion.
The news wasn't all bad.
Although revenue missed estimates, it was still up an impressive 29% year over year, and the company noted that 'global annual active consumers across the Alibaba Ecosystem' grew by 62 million—up 5%—with half that growth coming from outside China.
Operating profit, on the other hand, grew much more slowly than sales, rising only 10%, and net profit simply collapsed.
When calculated according to generally accepted accounting principles (GAAP), diluted net income per American depositary share slumped 81% to just $0.
31.
Non-GAAP (adjusted) or pro forma profit—the number that Alibaba and the analysts both emphasized—declined 38% to the aforementioned $1.
74 per share.
Granted, Alibaba explained that its profit slump was 'mainly due to increased investments in key strategic areas'—but a drop is still a drop, and those investments are the things that Alibaba is depending upon to drive its growth in the future.
In other words, to give Alibaba credit for growth without dinging the company for the costs it incurs to create that growth.
Of greater concern is the fact that Alibaba's investments don't appear to be paying off as planned.
Up until today's report, analysts had been forecasting that Alibaba would grow its sales 28% this year, but today Alibaba revealed that fiscal year 2022 revenue will in fact grow only between 20% and 23%.
Long story short, Alibaba missed on earnings today—and it's probably going to keep missing all year long.
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